New Super Rules! – know what I mean?

The Government has released their guidelines on the super changes confirmed in the 2017 Budget, on 15 June 2017 for changes starting 1 July 2017. We wrote about aspects of these changes in our post Unintended Consequences.

As we are not financial planners or accountants, all we can suggest is “inform yourself” and seek advice on your personal situation. Do not simply leave this to work itself out!

From the letter I received, I have copied the full URLs below for reference, which I hope will be of value to you.

Sometimes I wish I was not so cynical, but I can only say that the most value from these changes will be to financial advisers and accountants, and good luck to them.

For many, these changes will lead to a further imbroglio now and into the future. The benefits of this move appear to have little better than current budget deficit effects leaving our superannuation as a cash cow for future pillaging/tampering by government.

I have questions:

How can these changes possibly be aimed at encouraging people to stay well away from claiming the aged pension? (which will create a future budgetary problem)

Why would it matter how much was in super if (with appropriate grandfathering provisions) it was taxed on the way out – See Unintended Consequences ?

Have we seen modelling on what affect these changes will have on the Superannuation industry in future?

Can’t we just simplify the system instead of forcing people to engage advisory services to understand their own affairs?

Thanks for the heads up Jan. We’ve just been talking to our financial adviser about the upcoming changes. You’re so right, we do need to be informed about super and these changes, as it will have an impact on our financial future. #TeamLovinLife

Yep Lyndall, like it or hate it, it’s best to keep on top of changes, ask questions and try to understand as much as is practical about your own affairs – I know I have my limits. After all these rule are made by the Governments we elect and they affect us directly!

Hubby has taken an early retirement & had previously been in a defined benefits scheme so we’ve been through the advice thing recently – & then the rules change. Man, it does your head in – but you can’t afford to stick your head in the sand. #TeamLovinLife

Sad things are Jo: 1. the political football & 2. the complexity! Why?

We recently – because we canvass ideas and stories amongst friends and associates – were told that an advisor had told someone there was some 16 year limit on some defined benefits schemes. Now we are not financial advisors, but these guys were being paid for this advice, which was an apparent misinterpretation of the effect of changes.

Ugh, Super does my head in! I agree with you entirely. Why does it have to be so complicated and why do they keep changing the rules? You would think there would be some incentive for having saved well and not having to rely on the old age pension. It’s all so frustrating!

Right with you there Kathy. I guess if you have plenty, or almost none, maybe you don’t worry.

At any level I just find it offensive that I HAVE TO sort this out with a “professional” because you’re never sure if you have the rules correct from year to year.

I remain convinced this is merely a cash grab and that a simpler more equitable system would allow you to save as much as possible to keep you away from the OAP and tax super as it leaves your fund; grandfathered of course!

Tut tut! 😉 Trust me, working with your partner is a great thing to be able to do and it sounds like your husband may be the right person to join on the path of learning. There are decisions that you can (or may need to) make in the future together to make the best from your investments, super and otherwise.

Not always easy – I had to learn a lot from Jan which I initially found difficult – but now I know more and could do this myself if I had to but more importantly, actually enjoy the joint decision making.

With regard to your existing fund, it’s always worth reviewing any existing investments if only to confirm your confidence; you’ll never know if you don’t go there.

Superannuation is such a mystery to me – I know I have to start getting more serious about it, but I tend to put my head in the sand and hope it will all go away. Our super is ridiculously small, but we have a rental property that we’ll sell when we retire to help offset the funds we don’t have in super. I’m also thinking that investing in a share portfolio mightn’t be a bad idea either.

It won’t go away Leanne and if you only have a little (so far) all the more reason to establish the options you may have now and into the future. Those options, as you suggest, may be a share portfolio independent of super, and the investment property sounds like a good start. Whilst I really do not buy some of the commentary on how little you need for a “comfortable” or “modest” lifestyle in retirement, coming to terms with how you can build on what you have and future options are still good things to know.

You need to have a good look with a piece of paper, a pencil and a calculator (or a computer and a spreadsheet) and do some “what if?” calculations. Failing that, see an advisor or two armed with some hard questions.

Always bear in mind that the advisors, like you, don’t have a crystal ball and eventually you will need to sign off on some decisions. So, best you have given it some thought, looked at what you would like your future to look like, and go for it.

It’s all so confusing – and then probably you need to pay an accountant to figure it all out. The system is designed to relieve us of our savings one way or another! Thanks for the links and tips – we’ll be looking into them.

You’re most welcome. You know Johanna, I use to hate this stuff and it’s still not my favorite thing. That said, I eventually realised that leaving superannuation entirely in the hands of others was not my best choice, and look, I’m now writing about it.

The sooner you understand where you are and what you can do in the future, the better you will feel knowing what your options are, and that may be investment outside super depending on your circumstances! That may mean an advisor, but knowing a bit for yourself helps. Usually its not that hard.

I have to admit I’m ridiculously ignorant about all-things-superannuation. I have no idea how much I have, when I can access it or anything. I did – fortunately – combine 3 lots into 1 a few years ago, so only have two funds now… My mother did worry a lot during the 3-4yrs I didn’t work after my seachange though – in terms of what it would mean for me longer-term!

Well Deborah, can I seriously suggest you track down your info and take it in. If you are still with two different funds it would be a good idea to establish which one you want to consolidate into. Why? Because both funds will be charging you admin fees, so best you loose one lot of them, if you can. If you call the Funds and get some figures on your investments, an advisor can tell you which one is performing best and which may may do better into the future. Good basis for a decision. Then keep yourself interested; you will benefit.